There are fewer First Home Buyers now than 25 years ago

Where are all the first home buyers? 

Aussie's 25 year market trends report shows that First Home Buyers have  become a smaller proportion of the housing market over the past 25 years,  reducing from 22% of mortgage demand in 1993 to 17.4% in 2018.  

Here's an extract from this report:-

With housing affordability constraints becoming more challenging and changes to first home buyer grants and stamp duty concessions, first time buyer participation in the housing market has changed dramatically over the past 25 years.

While participation as a proportion of owner occupier mortgage demand has trended lower, there have been periods where first home buyers have surged back into the market based on government provided incentives such as the First Home Owners Grant, the boost to the First Home Owners Grant and changes to stamp duty rules affecting first home buyers.

Source: CoreLogic, ABS The proportion of first home buyers is based on the number of first home buyer housing finance commitments as a proportion of all owner occupier housing finance commitments.

Twenty five years ago 22% of the owner occupier housing market was comprised of first time home buyers, a trend which held reasonably firm until 2000 when the First Home Buyers Grant was introduced.  

The $7,000 First Home Owners Grant, which was introduced to offset the cost of GST, saw first home buyer participation rise to almost 26% of the owner occupier market before plummeting as housing affordability worsened during the housing boom which ran from 2001 to 2004.

First home buyers have demonstrated a clear response to government stimulus, with participation in the housing market surging to 31.4% of owner occupier demand in May 2009 on the back of the First Home Owners Grant Boost, where first time buyers received an additional $14,000 for buying or building a new home or $7,000 for buying an established home.

The boost was halved from October 2009 and abolished from January 1, 2010. 

Since that time, first home buyer participation has generally trended lower nationally, however, first time buyer involvement in the housing market varies substantially from state to state based on differences in housing affordability and differences in the first home buyer grant rules as well as other incentives such as building grants and stamp duty concessions. 

More recently, stamp duty concessions that became available in July 2017 across New South Wales and Victoria have seen first home buyers trend substantially higher, helping to support a rise in the national average of first home buyer participation.

Despite the recent rise in these states, first home buyers remain the most active in Western Australia, comprising almost one quarter of owner occupier housing finance commitments.

Outside of the recent stamp duty concession introduction in New South Wales and Victoria, all states and territories have some sort of incentive available for first home buyers.

The greater incentives are typically for those that buy or build a new home and for those that purchase a first home in a regional market.

About Michael Yardney Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.